The Implications of Canada’s New Regulatory Regime for Local Party Organization
Munroe Eagles
Political Science
University at Buffalo – The SUNY
[email protected]
David Coletto
Political Science
University of Calgary
[email protected]
Prepared for presentation at the Annual Meeting of the Canadian Political Science
Association, University of British Columbia, Vancouver, BC, June 4 – 6, 2008
We are grateful to Lisa Young for her invaluable assistance in obtaining much of the data
on which this analysis is based, and the SSHRCC Grant on which she is principal
investigator for making this research possible.
The passage into law of Bill C-24 in 2003 introduced sweeping changes to the
financing of Canada’s political parties, many of which profoundly alter the status and
(potentially, at least) the importance of their electoral district associations (EDAs).
Beginning in January 2004, the local organizations of all federal political parties no
longer were private associations. Rather, these grassroots organizations were required by
law to register with Elections Canada and to submit regular financial reports to this
agency detailing their contributions and expenditures. In 2006, the Conservative
government again amended the Election Finances Act, further limiting the sources of
funding available to EDAs. Along with the central parties and candidates, EDAs could
not accept political contributions from corporations, trade unions or other private
associations. Both pieces of legislation, therefore, bring three important consequences
for party finance. First, for the first time financial contributions to local party
organizations were limited. Prior to 2004, only national party organizations were required
to submit annual financial reports to Elections Canada. Local organizations were not
subject to reporting limits, nor were contributions to a party’s electoral associations
(EDAs) constrained. After 2004, local party organizations were integrated in the overall
regulatory apparatus that applies to all levels of party organization.
Secondly, local party finances are now transparent and open for scrutiny. The C24 reforms therefore close an important loophole in the regulation of election campaign
financing. Prior to 2004, local party associations could amass sizeable war chests (from
private contributors or the reimbursement of election expenses). These funds could be
transferred to their candidates for campaign purposes. This loophole made it impossible
to trace the original sources of these transferred funds, thereby blunting the disclosure
requirements of Canadian campaign finance regulation (Young, 1991: 20-22; Stanbury,
1991: 419-421; Geddes, 2000). The C-24 reforms extending disclosure regulations
governing contributions and expenditures to local electoral district associations of
Canada’s parties have therefore tightened the regulatory regime.
Serendipitously, the 2004 reforms have opened up a valuable window for political
scientists into the operation, activities, and vitality of these grassroots party organizations.
It has been customary to discount the importance of EDAs. These organizations, along
with other features of local political distinctiveness, have long been assumed to have been
overtaken by the centralizing and modernizing forces associated with mass media
markets, and professionalism in the party’s national campaign. These assumptions
prevailed despite mounting evidence from a variety of academic surveys of local party
officials that gave evidence of the vitality of grassroots party organizations (Carty, 1991;
Cross, 1996). However, as valuable as these studies have undoubtedly been in
demonstrating the continued vitality of political life at the grassroots, the data collected is
potentially subject to response bias (depending as they do on the voluntary compliance of
local officials in completing and returning questionnaires) and they do not support
longitudinal analyses. Beginning with 2004, the reporting provisions required by C-24
will generate a comprehensive (or at least reasonably so) supply of financial information
regarding EDA activities that is growing in value with each passing year.
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Of course, the advantages of comprehensivity are offset somewhat by the
necessarily narrow focus on financial records and the validity of the data depends on the
compliance of many hundreds of local party officials with the legal regulations.
Nonetheless, along with volunteer labour, money is among the most important assets that
these organizations deploy, both during and between campaigns (Stanbury, 1991: 5). As
such, financial records have the potential to offer concrete and important insights into the
organizational vitality of party organzations. Sources of money give an indication of the
structure of the local party’s relationship to important components of their constituency.
The level of expenditures serves as a reasonable proxy for the volume of party activity.
For these reasons, a comprehensive financial portrait of Canada’s local parties is a highly
worthwhile undertaking.
Lacking detailed information on the pattern of contributions and expenditures of
these grassroots units over the years prior to 2004, it is difficult to develop explicit
hypotheses about if and how the C-24 and Accountability Act reforms are likely to
impact upon EDAs. What follows in this paper, then, is an exploration of putative
“effects” of the new regulations, holding up what we know in the post-2004 period
(thanks to the reporting requirements for EDAs) against what we understand from
previous research to have been the situation in the period immediately preceding its
implementation. Three dimensions organize the empirical analysis. We know from
previous research that many dimensions of grassroots politics in Canada vary widely
according to party. For example, in Duverger’s terms the NDP is a “mass” party, whereas
the Liberals and Conservatives are “cadre” parties. This distinction is important for
understanding a variety of aspects of party organization and territorial integration, and as
cross-party comparisons are prominent in this analysis. Secondly, we also know from
previous research that local associations for incumbents tended to be larger and more
vigorous than those for non-incumbents (Carty, 1991: 39-46), so one prominent focus of
our explorations will investigate differences in local associations who won the seat as
compared to others who do not. We explore these dimensions in a discussion of the
sources of revenue coming into EDAs and in patterns in the inter-election expenditure of
funds. Finally, recognizing that Canada’s parties are essentially vote-raising machines, a
final section explores whether their success in this regard is attributable to the financial
strength of their EDAs. The result of these empirical explorations is a benchmark portrait
of grassroots party activity at the outset of the new regulatory regime. Before turning to
this, however, some general comments on the potential impact of C-24 and
Accountability Act reforms on EDAs are in order.
Some Possible Impacts of C-24 and Accountability Act Reforms on EDA Financial
Life
As electoral machines, Canadian parties – at the federal, provincial, and local
levels – tend to concentrate activity on the election campaign. Federal and provincial
levels of the main parties maintain some organizational continuity between elections, but
party life and vitality in the constituency trenches has traditionally been depicted as more
closely tied to the electoral cycle. Here we encounter something of a paradox: EDAs
themselves have only a tenuous relationship to this most important party activity. As
Carty (1991: Figure 7.3, p. 156) has shown, local campaigning has traditionally been a
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candidate-centered affair, with official agents, campaign managers, and other key
personnel often being appointed by the candidate rather than the local party organization
(the exception is the NDP, where the party’s local executive exercises relatively more
control over candidate recruitment and the election campaign). This, coupled with the
relative permeability of the major parties to insurgent or “outsider” candidates mobilizing
large numbers of “instant members” through the nomination process, implies that there
are potential divisions between local campaigns and parties. Until 2004, formal financial
accounting was required only of the campaign team during the election period itself
rather than of the local party organization, which was unregulated.
Existing research suggests that there may be considerable uncertainty and
autonomy in terms of the relationship between a party’s campaign organization and its
EDA, between EDA and higher levels of party organization, and between candidates’
local campaign organizations and higher levels of the party. With successful campaigns
often able to raise more money then required (after reimbursement of half their election
expenses from Elections Canada), transferring this surplus to the party’s EDA could
provide the local organization with a significant war chest.1 Perhaps for this reason the
central offices appear to have come to regard their EDAs as a source of revenue. Carty’s
(1991: 77) research suggests that, to the extent that funds are flowing across levels in a
party at all, it seems as though the direction of flow is from the grassroots to the center.
The centralizing nature of intra-party financial flows has a parallel in the relative
lack of central party financing of local election campaigns. In contrast to the experience
of a number of other countries (see Carty & Eagles, eds., 2003), Canada’s national or
provincial party offices tend not to get heavily involved in the financing of candidates’
campaigns. Rather, candidates and their campaign teams are expected to raise their
campaign funds primarily from local sources. For example, a study of the transfers to
candidates from registered parties in the context of the 1997 election campaign suggested
that while between half and three-quarters of candidates received party money to help
with their campaign, the amounts transferred accounted for less than a quarter of all the
funds available to candidates (Carty & Eagles, 2005: 89-90). In significant respects,
then, Canada’s federal parties tax their grassroots outside of campaigns and do not
compensate with transfers of funds at elections.
It seems likely that several of the C-24 and Accountability Act related reforms
have the potential to impinge on a number of these traditional patterns and relationships.
In particular, elimination of corporate and union donations to all levels of the party
organization has the potential to tighten the financial situation of some local associations
by drying up a potential source of revenue. Now EDAs will need to compete with other
levels of the party for these relatively modest amounts of legally-permissible funds. The
public funding that is designed to replace these sources of party money goes now to
central parties and not the EDAs (who nonetheless will remain responsible for mobilizing
1
However, the disposition of campaign surpluses is an internal party affair and there is no requirement that
these surpluses remain in local coffers. For example, the Liberals in 1988 required candidates to sign over,
at the beginning of the election campaign, one-half of all reimbursements to the national party and some of
the NDP’s provincial wings have made similar claims on their federal candidates (Carty, 1991: 191).
3
the votes upon which these subsidies are based and calculated). As such, it is possible
that EDAs will grow more dependent on transfers from central party coffers. This may
erode some of the traditional autonomy of grassroots party politics, perhaps making it
easier for central party organizers to intervene in constituency election campaigns and
target resources to marginal seats along the lines of parties in other settings (see the
studies in Carty and Eagles, 2003).
On the other hand, however, the C-24 reforms have the potential to invigorate and
energize grassroots party politics. For example, requiring the formal and legal registration
of EDAs as part of the regulatory apparatus governing party and campaign finance, and
the requirement for regular financial record-keeping and reporting, may well help
institutionalize and stabilize local associations. Compliance with the new regulatory
regime will certainly call forth higher levels of expertise and more continuous and intense
levels of commitment on the party of local volunteer activists. These developments have
been shown elsewhere to have been associated with more institutionalized and stronger
EDAs (e.g., Johnson, 1991: 54-55). While it will be some time before the full impact on
EDAs of these reforms will be fully evident, we can begin to address these issues by
inquiring about the state of EDA finances in the immediate period of the reforms’
implementation.
The State of Local Party Finances Post C-24: Revenue, Expenses, and the Bottom
Line
Perhaps the most basic and important question to ask regarding the state of local
party organization in the post-2004 period concerns the financial health of local party
organizations. Ken Carty’s research (1991: 94-98) has shown that there is considerable
variability in the financial circumstances of constituency associations, even within
parties. In the past, the financial strength of an EDA has been closely associated with the
ambitions and activities of a small core of local activists. Often these coalesce around a
would-be candidate who works to invigorate the organization to support a future
campaign (Stanbury, 1991: 98). Previous research based on surveys of local party
officials suggests that relatively few local party organizations had amassed significant
assets (only one in five overall reported more than $10,000 in income for 1990; see
Carty, 1991: Table 4.5, p. 79), and those which had managed to do so were in seats where
they had won (Carty, 1991: 75).
How does this portrait stand up in light of the annual EDA financial reports
required since 2004? Complete financial records, including sources and amounts of
revenue and the nature and amount of expenditures, for all EDAs are available for 2004,
2005, and 2006. Including the “opening balance” that EDAs reported for 2004 as an
indicator of the state of grassroots party finance immediately prior to the introduction of
the C-24 reforms, we can identify the financial situation facing grassroots party
organizations at four points in time – the beginning and end of 2004, the end of 2005, and
the end of 2006. Table One presents information for the five major parties at these points
in time.
Table One About Here
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The figures reported in Table One suggest that EDAs aregenerally solvent but far
from wealthy. Liberal Party EDAs, coming off more than a decade of being the
governing party and the only one with electoral strength in all regions, had significant
advantages in terms of their average income and expenditures in 2004, and maintained a
sizeable advantage in terms of the bottom-line balance of assets and liabilities. At the
end of 2004, Liberal Party EDAs averaged net assets of $16,143, compared with $15,823,
for the Conservatives, $9,372 for the Bloc Quebecois and $3,748 for the NDP.
However, following 2005, the Liberal Party EDAs soon lost their advantage.
During 2006, Conservative EDAs averaged income of $45,907 compared with $23,836
for the Liberals. Furthermore, at the end of 2006, Conservative EDAs were on average
over $26,000 richer than their Liberal counterparts. Conservative EDAs had average net
assets of $40,109, compared with $23,659 for the Bloc Quebecois, $14, 408 for the
Liberals and $4,100 for the NDP. Regarding the putative impact of C-24 reforms on
EDA vitality, it is of course too early to offer any definitive assessment. However, it is
interesting that over the 2004-2006 period the average net assets of EDAs increased for
only the Conservatives and Bloc Quebecois EDAs. While this might appear promising
for EDAs in the post-C-24 period, this was not an ordinary couple of years. Given that
two elections transpired over this relatively short period, it is possible that a substantial
portion of the revenues of the major parties resulted from the infusion of surplus
campaign funds and expense reimbursements from Elections Canada. Equally, however,
having to mount two election campaigns in relatively rapid succession may have depleted
EDA treasuries to a greater extent than usual. Establishing the post-C-24 equilibria in
EDA finances will take time, and to understand how these forces balance out will require
information from at least several more years of accumulated financial data. At this point,
however, it is clear that there is no evidence to be found in this initial period of the C-24
reforms of an imminent crisis in grass-roots party financing.
As was found in earlier studies of local party finances, there is considerable
diversity of circumstance to be found within as well as between parties. At the end of
2006, a total of 35 EDAs have been successful in amassing substantial war chests. All
but four of these EDAs were Conservative with the top five Conservative EDAs being
Pontiac EDA ($211,703 balance); Abbotsford EDA ($208,496 balance), Don Valley
West EDA ($201,751), Calgary Southwest ($196,167 balance) and Laurier ($181,566
balance). Two EDAs in Toronto, Trinity-Spadina ($165,808 balance) and EglintonLawrence ($120,028) had the highest net assests for the Liberals. None of the other
parties had EDAs with more than $90,000 in net assets.
Table Two About Here
Outliers such as these extremely affluent EDAs have the potential to distort the
party averages reported in Table One. As Table Two illustrates, the averages reported are
in fact substantially inflated by the wealth of the most affluent outliers. However, even
between 2004 and 2006, there does appear to be some significant changes in the
distribution of EDA assets within political parties. In 2004, 35% of Conservative EDAs
had less than $1,000 in assets but by 2006, only 7% had such small asset reserves. In
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contrast, over two thirds of Conservative EDAs had more than $10,000 in assets, a 39
percentage point increase from 2004.
The overall picture of EDA financial health that emerges from Tables One and
Two suggests that most EDAs have extremely modest assets – sufficiently modest
compared to the average cost of fighting an election (for which the allowable limits range
from roughly $60,000 to $100,000 per candidate) so as not to provide a serious
inducement to assist in the recruitment of candidates who might be considering running
for a local party’s nomination.
Previous research on grassroots party organization in Canada has found sharp
differences associated with the incumbency status of the local organization (Carty, 1991:
94-95). The comparisons of the balance sheets of EDAs that won their seat in 2004 with
those that did not dramatically confirms the persistence of this pattern in the 2004-2006
period. The differences are quite striking in magnitude, and not particularly concentrated
in the NDP, the party where these differences were most evident in the past. These
dramatic differences do not diminish over the three year period we cover. In all five
parties, winning EDAs had bank balances that were at least three times (and in many
cases many times more than this) higher than their counterparts which were electorally
unsuccessful in 2004. Clearly, there is a close association between the ability of a party
to raise money locally and the ability of their candidates to raise votes. We will return to
explore the electoral connection and party financing in the final section.
Table Three About Here
Sources of EDA Revenue – Contributions and Intra-Party Transfers
In addition to the accumulated assets (or liabilities), the financial health of an
EDA rests on its ability to attract financial contributions, according to the guidelines laid
out by the Elections Act, and transfers of resources from other affiliated organizations
within the party. Understanding how a local party organization raises its funds is
revealing of a series of important relationships. First, patterns regarding the sources of
financial contributions reveal something of the relationship between the local party and
its (presumably primarily local) environment. Intra-party transfers are an unobtrusive
indicator of the party’s organization-building strategy, and depending on the net amount
being transferred, could either be a source of revenue or a form of intra-party taxation on
the EDA. The volume and direction of financial flows are therefore particularly revealing
of a party’s strategic orientation. On both of these dimensions, the motivation lying
behind the decision to invest in an EDA is likely to be responsive to whether or not the
local MP is a member of the party. For this reason, we distinguish between seats held and
not held by a party in the analysis that follows.
Of course there are a number of financial strategies imaginable. A case in point is
the recent controversy concerning the so-called ‘in-out’ transfer of resources between the
national and local Conservative Party campaigns in 2006. These transfers are suggestive
of another logic than simple party building or even ‘targeting the marginals.’ In this case,
when the central Conservative campaign organization bumped up against its spending
6
limit, the party transferred money into 67 local campaigns to help them buy nationallyfocused advertising that is not counted towards the national party’s legislated spending
limit. Those candidates receiving these transfers then immediately returned the money to
pay for ads which were almost identical to those being run by the national party. Not only
did this allow ‘national’ spending to exceed the legal limit but the recipient candidates
were able to claim reimbursements for these election expenses from Elections Canada
totalling approximately $1.3 million (CTV News, April 22, 2008
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/
20080422/in_out_080422/20080422?hub=Politics) 2
Table Four shows the sources and magnitude of contributions to local EDAs for
each of the major parties for 2004. Since a federal election took place that year, it is
important to remember that these funds are separate from, and in addition to, anything
contributed to the official candidates of these parties. As such, the data speak rather
generally but forcefully to one of the concerns raised by students of cartelized party
systems, namely that the parties reliance on state funding in such systems is likely to
erode their ties to civil society (Katz & Mair, 1995). On the face of it, the evidence in
Table Four suggests that these concerns are misplaced – or perhaps premature – in the
immediate aftermath of the C-24 reforms. Even in an election year, when candidates’
campaigns are hungry for political cash to fuel their campaigns, the EDAs at the base of
the party system were able to secure significant amounts of money to fund their activities.
Table Four About Here
The results reveal some interesting inter-party differences in the raising of party
money. For example, Liberal and BQ EDAs were greatly advantaged in terms of their
ability to attract funds over the other parties. The total inflow of contributions to the
EDAs of these two parties is almost twice that going to Conservative EDAs, and more
than twice as much as that going to the NDP and the Greens. As expected, there are
significant differences in each party between the amounts raised by EDAs whose
candidate won the race in 2004 and those where they lost (though of course the Greens
failed to win any seats, so there is no comparable comparison for that party). The gap is
particularly large in the case of the NDP, confirming what we have long known about the
sizeable difference in vitality separating successful and unsuccessful local organizations
in that party (Carty, 1991: 241-42).
2
While the legality of this practice following the RCMP raids on the
Conservative Party headquarters in April 2008 remains unclear, many, including
opposition MPs, argue that it breaks the spirit of the Election Finances Act, since it
allows the national party to usurp national spending limits and the local campaigns to be
reimbursed for what are essentially expenses of the national campaign. Of course, the
very existence of this controversy is evidence of the impact of C-24 reforms, since
without them this behaviour would not likely have been discovered. Defenders of the
practice argue (variously) that the distinction between national and local expenditures is
arbitrary and unclear in practice (Coyne, May 7, 2008); or that local campaigns are
ineffectual and therefore local parties are behaving rationally in transferring their
spending to the national campaign (Frum, April 18, 2008; Coyne, April 23, 2008)
7
Given the constraints on union and corporate donations in place for the first time
that year, it should not be surprising to find that all parties’ EDAs raised substantially
more money from individuals than from all other sources. Indeed, EDAs for the Liberals
and the Bloc were the only ones with much success getting substantial corporate money
over the year, and trade union contributions were negligible across the board (including
even the NDP). In every party, EDAs which experienced an election victory in June
2004 were more highly supported by contributions than others. Corporate donors to
Liberal and Bloc EDAs were especially generous when the local party held the seat in
2004.
In addition to contributions, the other main source of revenue for EDAs comes in
the form of financial transfers from unspent (or reimbursed) campaign funds from its
candidates and from other parts of the party organization. Such transfers must now be
recorded but they are otherwise not constrained by the legal regime governing party
financing. So parties are free to move resources as they see fit in accordance with their
strategies of organization building. This may result in a net source of income for an EDA,
but if the outflow of money to other levels of the party is not exceeded by the amount
transferred in, then such transfers will be a drain on EDA resources. If money flows from
other (higher) levels of the party into the EDA, this reveals a relatively strong grassroots
orientation for the party. However, if financial flows are from the EDAs outward to other
levels of party organization, the party will have opted for a centralizing organizationbuilding strategy. Given the enormous discrepancies we have seen in the financial
situation of incumbent/non-incumbent EDAs, parties themselves are likely to distinguish
between its winning and losing grassroots organizations when adopting a strategy of
financing its operations. So it is important to continue with this distinction in our analysis
of intra-party financial flows.
Based on the detailed financial records available for 2004, Table Five presents an
overview of the parties’ approach to organization building. The breakdown shows four
different sources of transfers from party sources into their EDAs. Most obviously, money
can come into the EDA from higher levels of the party itself. However, it may also be
transferred from the party’s candidates in the 2004 election. As noted earlier, parties can
decide which level of the organization receives any surplus from the campaign funds of
its candidates, and which result from any reimbursement of allowable expenses from
Elections Canada. Since the electoral map was redrawn before the 2004 election, many
local EDAs had to legally reconstitute themselves to accommodate the changes to their
district boundaries. The Act allows for the transfer of funds from the old associations to
their replacements. Finally, the C-24 reforms extended contribution and spending limits
to the internal party nomination contest candidates for the first time in 2004, and
provided for the transfer of any surplus remaining for candidates to be transferred to the
party (without stipulating which level of the party should receive this money).
Of course, political parties are free to move funds to any level of the organization
they see fit. We have seen that EDAs are not without the means to raise their own money
through contributions. As such, it is also possible that parties may decide to transfer
money out of the local organization to fund the operations of higher levels of the party, or
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simply leave the EDA alone. Carty’s (1991: Table 4.2; p. 77) analysis of the situation in
the late 1980s suggested that, except for the NDP, most parties opted for a policy of
grassroots financial autonomy (no significant flows in or out of EDAs). Of those
instances where money was transferred within the parties, however, it was almost always
flowing out from EDAs to other, higher levels of the party organization. Inferences
regarding party strategy, therefore, must incorporate both the inflow and outflow of
money.
Table Five About Here
The data in Table Five offer a contrast with previous scholarship in suggesting
that there is considerable movement of money within Canada’s parties. Much of the flow
of money into EDAs comes from transfers from their general election (and to a much
lesser extent, nomination) candidates. Of course, these sources will not be a factor in nonelection years. However, it is also clear that EDAs – and particularly ones which won the
local contest in 2004 – receive money from higher levels of the party organization. In
every case, the total amounts transferred into the EDA from party coffers exceeded the
totals transferred from their election candidates. And taken collectively, the totals
transferred into EDAs provide a source of revenue that is generally comparable to the
amounts we have shown that they raise through contributions. With the exception of the
BQ, parties tend to move almost twice as much money into the EDAs of their winning
candidates as they send to their unsuccessful counterparts. This suggests that most parties
tend to build around their strengths – only the BQ appears to use intra-party transfers as a
mechanism to expand their party into territory where it is weak.
However, the sixth row of Table Five shows that party strategies also involve
‘taxing’ their local associations. In fact, the average amounts taken from EDAs by
Canada’s parties in all cases exceeded the total amounts transferred into grassroots
organizing. This was the case with all parties, but the negative balances of Liberal and
NDP EDAs were especially large in 2004. It is helpful to consider the magnitude of these
net transfers in terms of the overall financial position of EDAs. This is done in the bottom
row by expressing the negative net flow of funds in terms of a percentage of the total
assets available to the EDA. These figures show that the NDP assigns the highest ‘tax’ to
its local associations, and extracts an especially steep amount from its losing associations
(an amount representing an astounding 260% of the net assets of these EDAs). The
Liberals also tax their EDAs heavily, with average net outflows of money in 2004
representing over 100% of the net assets of their grassroots organizations. Also
noteworthy is the BQ pattern of extracting much more money from their winning than
their losing seats. This suggests that the Bloc is the only party that does not
unambiguously pursue a centralizing strategy with respect to party finances.
What of the possibility that central parties “target the marginals” with their
transfers to their EDAs? there is also the possibility that the national parties transfer funds
down to EDAs in a strategic manner. Figure 1 examines the relationship between
transfers from the national party to the EDA and the 2006 margin of victory for each
province. As the scatterplots indicate, the relationship between national party transfers to
the EDA and electoral margin is strongest for the NDP, while more moderatest for the
Conservatives. It appears that the competitiveness of the local election is not a
9
significant factor in transferring money to EDAs for the Liberals, BQ or the Greens.
Furthermore, as would be expected, availability of funds within the national party would
be an important factor in their ability to transfer money to EDAs. As Table Six
illustrates, the Bloc Quebecois transferred the most money to EDAs on average in ridings
they ran a candidate, followed by the Conservatives, New Democrats and Liberals. As a
result, it appears that wealth at the national level can and is being transferred to the
EDAs, and more significant to this study, the inclusion of public funding, particularly in
the case of the Bloc Quebecois, seems to aid local party organizations.
Table Six About Here
While it is too early to make definitive conclusions on the impact of C-24 on
party behaviour, there does seem to be some incentive for the national parties to
adequately finance the EDAs and local campaigns. As one of the main instruments of
voter mobilization, and the relationship between votes and public funding (at an inflationadjusted rate of $1.75 per vote), parties have an interest in maximizing votes even in noncompetitive ridings. Therefore, it seems plausible that for the Liberals and
Conservatives, who have traditionally had more financial resources than the NDP or
Greens, supporting weaker EDAs or campaigns in non-competitive ridings with financial
transfers makes some strategic sense.
In general, it appears from these data that intra-party finances involving EDAs
have become significantly more integrated than was the case in the 1980s. Despite the
fact that the monetary allowances to Canada’s parties provided by the C-24 reform
package have flowed to the central party apparatuses, these organizations continue to
extract significant resources from their grassroots counterparts. Whether this extends to
the party in non-election years is a question that must be asked when the detailed EDA
financial information for 2005 is available.
Building Local Organizational Capacity: Extra-Campaign EDA Expenditures
Local party associations exist to further a political party’s interest in the riding by
recruiting candidates and members, raising funds, and communicating the party’s
message. Some of these activities are basic to the self-maintenance of the local
organization, and while volunteer labour is often available, most cost money (even fundraising requires some investment). Carty’s (1991: 59) analysis of the situation in the
1980s revealed that local associations of Canada’s then-three major parties almost
universally took on tasks self-maintaining such as fund-raising activities, social events,
and membership campaigns. Carty also found that most local associations (65%) engaged
in policy study and development, and many undertook communications activities such as
public meetings (52%), publishing a newsletter (46%), and getting exposure on local or
cable TV (14%). Only 9% reported doing any local polling. Taken cumulatively, Carty’s
portrait is one of relatively vigorous local party organizations even outside of an election
campaign.
Table Six About Here
The data contained in the detailed EDA reports for 2004 and reported in Table Six
refer only to financial expenditures, and therefore are not directly comparable to Carty’s
10
results. However, they do confirm that EDAs are active outside the election campaign.
Only the Green Party’s EDAs appear to have largely folded up shop outside the campaign
period itself. Organizational self-maintenance activities (fund-raising, office expenses,
professional services, salary and benefits, travel and hospitality, and “other” spending)
figure prominently in the other four parties. These expenditures reflect the cost of doing
business as a local party and while there is some discrepancy between EDAs which won
and lost seats and across the parties, these are relatively small. One interesting and
somewhat surprising feature of the item for “salaries and benefits” shows that the NDP
EDAs that were successful in the June 2004 election spent considerably more on average
on this item than the other parties.
Again confirming earlier research, the NDP also stands out in most expenditure
categories for having the largest gap between its electorally successful and unsuccessful
grassroots organizations. In other parties (except of course for the Greens, where there
were no winning EDAs), this gap exists but it is more muted. Even in an election year
very little radio or TV ads are run by EDAs. In the case of Conservative, Liberal, and
NDP EDAs, a somewhat higher priority attaches to “other advertising” which presumably
includes newspaper ads and leafleting. Relatively little is spent on polling or political
research, and it is likely that the high levels of policy study and development noted by
Carty in his survey of local party associations is a voluntary activity undertaken by
activists rather than paid professionals.
Financial and Electoral Strength – Is There a Relationship?
From the foregoing, it is clear that EDAs in all parties look quite different
depending on whether or not the party’s candidate won in 2004. In general, the most
affluent and vigorous (in terms of extra-campaign expenditure activities) EDAs are,
irrespective of party, ones in which their local candidate took the local seat in the June
election. These differences are apparent in the detailed 2004 data, but they also persist in
the evidence of the balance sheets for 2005 and 2006. This suggests that there may be
some relationship between the strength (proxied here by financial wealth) of an EDA and
the electoral performance of its candidate.
As plausible as this relationship sounds, establishing the causal connection
between money and votes in statistical research is a challenging undertaking. This is
because both measures are indicators of party support within the local community and
there is no easy way of saying which causes which. While local organizational strength
may contribute to a candidate’s electoral success, it is also possible that the local
organization may itself benefit from a candidate or party’s prior local popularity. This
subtlety notwithstanding, it is interesting to begin the by looking at the general
relationship between a local organization’s financial and its candidate’s electoral
strength.
Figure Two About Here
Perhaps the easiest way to appreciate the general nature of these relationships is to
inspect scatterplots of local EDA assets and their electoral performance. Figure One
11
illustrates these simple bi-variate relationships in terms of a local party’s 2006 net assets
and its candidates’ share of the total vote in the January 2006 election. These plots show
only a modest positive relationship between these measures, implying that electoral and
EDA financial support at the local level are somewhat distinct. In all cases, the
superimposed linear regression line performs almost as well at summarizing the nature of
these relationships as do the quadratic alternatives. The relationship between local
organizational assets and popular vote is strongest for the Conservatives, but there is
considerable scatter around the lines (and only about 30% of the variance in votes across
ridings can be statistically attributed to the local asset balance). Among the other parties,
the size of the local party organization accounts for 24% of the NDP’s electoral vote
percentage, for 23% of the Liberal Party’s electoral vote percentage and 16% of the
Green Party’s popular vote percentage in each riding. The relationship is weakest among
Bloc Quebecois ridings, explaining only 10% of the variation in the BQ vote percentage.
The weakness of these relationships contrasts sharply with the much stronger ties
uncovered in previous research between campaign spending by candidates and their vote
shares (in 2000, for example, the ranged from 24% variance explained for Liberals to
76% for the NDP; See Carty & Eagles, 2005: 48). Clearly, there is no simple
correspondence between local EDA organizational strength and the conduct of successful
campaigns, and further research will be necessary to more fully appreciate these
connections.
Conclusion
What, then, is the general ‘state of the local party’ following the adoption of
recent reforms? Most obviously, there are signs of the continued vitality of grassroots
party politics virtually across the partisan board. Local EDAs raise substantial amounts of
money, are generally financially solvent, and often serve as sources of revenue for higher
levels of party organization. While Canada’s parties remain primarily electoral machines
designed to mobilize support in terms of votes, there appear to be significant EDA
activities that occur outside the campaign period. The substantial financial transfers
involving EDAs and other levels of the party suggest that – if anything – the financial
integration of Canada’s parties has been increasing over the past several decades.
What, then, can be said about the impact of C-24 reforms on local party
organization based on their annual financial reports? Definitive responses to this question
are rendered difficult by the absence of EDA financial data from the pre-2004 period, and
by virtue of the fact that detailed data on the post-reform period is available only for the
first year. The situation is complicated further by the fact that 2004 and 2006 are federal
election years and therefore do not represent ‘business as usual’ for these electorallyoriented organizations. While the release of the complete data for 2006 is helpful in this
respect, given that the lack of a majority for the government formed in 2004 and the
expectation (correct, as it happened) of an imminent election call, it could be that several
years will need to pass before we can observe EDAs in circumstances that have in recent
decades come to be considered normal. Finally, there is every likelihood that the relations
between EDAs and higher levels of party organization will continue to evolve, in part at
least as a response to the new transparency in party finances. Political parties are
voluntary organizations and the ties that unite and motivate activists are continually
12
subject to negotiation and renegotiation. Arguably, the terms of the agreements reached
across the levels of Canada’s party organizations in the future will be more clearly
defined, and therefore altered, by the very presence of reliable EDA financial data.
The available data do speak more or less clearly to several hypotheses that might be
advanced about local associations in this heavily ‘cartellized’ party system. First, there is
no sign that the local associations have been rendered anachronistic by the flow of
significant public funds to the central party organizations. EDAs in all five parties in
most constituencies (except for the Greens, which have reporting EDAs for only 80 of the
308 federal ridings) have been able to maintain some positive asset balances (with no
sign yet that these are diminishing), and undertake significant fund-raising and party
maintaining activities. Their ability to attract significant amounts of financial
contributions suggests that concerns about weakening linkages between grassroots party
and civil society are either premature or exaggerated in the Canadian case. However, as
evidence from the Bloc Quebecois EDAs reliance on central party funds, and the
Conservatives’ “in-out” scheme, the relationship between EDAs, the campaigns they
mount, and the central party is still in a state of flux. With the strict restrictions on the
sources of funding, and the highly competitive nature of federal politics, EDAs, if they
are to be valuable components of a political party’s electoral apparatus, may require more
intervention from the central party. With the influx of regular, predictable, and sizeable
allowances from the public treasuring going to central parties, it is perhaps surprising to
see their continued tendency to “tax” their grassroots organizations. Whether this
situation is tenable over the long term is unclear, now that the books on party finances are
completely open for all the participants to see. But for now, at least, the grassroots of
Canada’s party system seem to be in a reasonably healthy.
References
Carty, R.K. (1991). Canadian Political Parties in the Constituencies: Vol. 23 of the
Research Studies for the Royal Commission on Electoral Reform and Party
Financing, Toronto: Dundurn.
Carty, R. Kenneth., and Munroe Eagles, (eds.). (2003). “Party Organization and
Campaigning at the Grassroots: Special Issue,” Party Politics, 9, 5 (September).
Carty, R. Kenneth., and Munroe Eagles, (2005b). Politics is Local: National Politics at
the Grassroots, Toronto: Oxford University Press Canada.
Coyne, Andrew, (2008). “Local Campaigns are Largely a Fiction Anyway,” Maclean’s,
(April 23rd)
http://www.macleans.ca/columnists/article.jsp?content=20080423_16408_16408
&id=8 (accessed May 3, 2008)
13
Coyne, Andrew, (2008). “Let the Parties Work it out for Themselves,” Maclean’s (May
7)
http://www.macleans.ca/canada/opinions/article.jsp?content=20080507_51975_5
1975 (accessed May 10, 2008)
Frum, David, (2008). David Frum on Elections Canada: Power-crazed bureaucrats or
dangerous speech-censors? The National Post, (April 18)
http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/04/18/davidfrum-on-elections-canada-power-crazed-bureaucrats-or-dangerous-speechcensors.aspx (accessed 5/7/08)
Geddes, J. (2000). “The Black Hole of Election Money,” Maclean’s (March 27th): 34-6.
Johnson, David .(1991). “The Ontario Party and Campaign Finance System: Initiative
and Challenge,” in F. Leslie Seidle, ed., Provincial Party and Election Finance
in Canada: Vol. 3 of the Research Studies for the Royal Commission on Electoral
Reform and Party Financing, Toronto: Dundurn, pp. 39-88.
Katz, Richard S., and Peter Mair, (1995). "Changing Models of Party Organization and
Party Democracy: The Emergence of the Cartel Party," Party Politics, 1, 1,
(January): 5-28.
Stanbury, W.T. (1991). Money in Politics: Financing Federal Parties and Candidates in
Canada: Volume1 of the Research Studies for the Royal Commission on Electoral
Reform and Party Financing, Toronto: Dundurn.
Young, Lisa (1991). “Toward Transparency: An Evaluation of Disclosure Arrangements
in Canadian Political Finance,” in F. Leslie Seidle, ed., Issues in Party and
Election Finance in Canada, Volume 5 of the Research Studies for the Royal
Commission on Electoral Reform and Party Financing, Toronto: Dundurn, pp. 343.
14
Table One
Mean EDA Revenues, Expenditures, and Balance (Assets and Liabilities), by Party,
2004- 2006
Conservatives Liberals
NDP
BQ
Greens
$ Opening
14,944
25,761
5,620
5,044
346
Balance 2004
23,546
38,256
12,492 39,291
4,038
$ Income
2004
31,658
51,965
16,556 42,924
4,083
$ Expenditures
2004
45,907
23,836
10,420
57,537
3,982
$ Income
2006
22,388
25,219
9,118
42,270
2,824
$ Expenditures
2006
% Change
04 to
95%
-38%
-17%
46%
-1%
Income
06
% Change
04 to
-29%
-51%
-45%
-2%
-31%
Expenditures
06
$ Balance
Assets/Liabilities
2004
2005
2006
15,823
16,143
3,748
9,372
836
20,140
40,109
29,113
14,408
5,792
4,100
6,786
23,659
277
1,921
Table Two
EDAs and Their Assets (2006), By Party*
Column Percentages (N)
Conservatives
< $1,000
$1000 $5,000
$5,000$10,000
>
$10,000
Liberals
NDP
BQ
2004
35%
(109)
2006
7%
(20)
2004
28%
(81)
2006
14%
(36)
2004
51%
(136)
2006
42%
(106)
2004
13%
(6)
2006
4%
(2)
17%
(52)
15%
(42)
21%
(66)
26%
(67)
30%
(80)
30%
(76)
35%
(17)
6%
(3)
14%
(44)
9%
(25)
13%
(36)
15%
(38)
10%
(26)
10%
(26)
21%
(10)
8%
(4)
33%
(103)
69%
(195)
36%
(102)
45%
(116)
10%
(26)
18%
(45)
31%
(15)
83%
(43)
* None of the 80 Green Party EDAs reporting to Elections Canada in 2004 registered
any assets.
15
Table Three
Building Local Organizations – The Importance of Incumbency*
Conservatives
Liberals
NDP
BQ
2004 Balance
(Assets/Liabilities)
2005 Balance
(Assets/Liabilities)
2006 Balance
(Assets/Liabilities)
Won
seat
2004
Did not
win
2004
33,930
40,510
70,546
7,175
10,397
22,834
Won
seat
2004
Did not
win
2004
27,493
46,378
24,474
7,775
15,640
5,931
Won
seat
2004
Did not
win
2004
17,825
32,098
19,106
2,684
3,884
3,349
Won
seat
2004
Did not
win
2004
9,605
7,322
23,404
5,876
219
19,446
* No Green Party candidates were elected in 2004.
16
Table Four
Contributions to EDAs, 2004
(Mean $)
Conservatives
Total Seats Seats
Won Lost
7,950
9,680
7,123
Individuals
1,566
1,818
1,446
Corporations
Trade
0
0
0
Unions
Registered
18
2
26
Associations
Total
9,524
11,500
8,580
Contributed
Total
Liberals
Seats Seats
Won Lost
Total
NDP
Seats
Won
Seats
Lost
Total
BQ
Seats
Won
Seats
Lost
Greens
Total
12,027
5,698
16,698
9,951
8,189
4,670
7,203
204
19,200
703
6,288
166
16,131
3,838
16,672
4,062
8,018
467
2,502
203
92
191
11
5
21
4
75
80
0
0
111
5
197
0
0
1
0
0
0
1
17,767
23,807
12,803
7,393
20,182
6,417
18,607
19,282
8,485
2,726
20
Table Five
Party Financial Strategies for Grassroots Organization
$ Mean, 2004
Transfers from
Party
Transfers from
Candidates
Transfers from
Registered
Associations
Transfers from
Nomination
Contestants
Total Transfers
TO EDA
Transfers
FROM EDA to
Party
Intra-Party
Balance to EDA
Net Transfers
as % of Net
EDA Assets,
Conservatives
Total
Seats
Seats
Won
Lost
Total
Liberals
Seats
Won
Total
NDP
Seats
Won
Seats
Lost
6,804
10,177
5,209
5,087
7,480
4,942
10,063
2,522
4,021
2,568
4,120
1,834
33
92
14,150
Seats
Lost
Total
3,121
869
4,663
579
8,700
8,317
14,443
62
5,698
2,654
2,426
11,748
1,714
2,396
2,501
817
479
1,620
1,005
2,122
149
891
93
306
321
81
55
6
15
4
24
3
14
2
0
0
0
0
23,885
9,548
11,020
14,853
7,871
3,426
17,316
2,366
11,401
11,139
15,342
608
17,547
28,024
12,543
29,002
39,341
20,508
11,274
36,100
9,380
31,179
32,125
16,999
2,303
-3,397
-4,139
-2,995
-17,982
-24,488
-12,637
-7,848
-18,784
-7,014
-19,778
-20,986
-1,657
-1,695
21.5%
12.2%
41.2%
111%
89.1%
162.5%
209.4%
105.4%
261.3%
211%
218.5%
28.2%
202.8%
21
BQ
Seats
Won
Seats
Lost
Greens
Total
Figure One
National Party Transfers to EDAs by Electoral Margin
2006
Conservative Party
Liberal Party
22
NDP
Bloc Quebecois
23
Green Party
24
Table Six
National Party Transfers to EDAs, 2006
(in dollars)
Party
Total Transferred to EDAs
# of Candidates
469,290
1,602,421
889,947
787,026
132,818
75
308
308
308
308
Bloc Quebecois
Conservative
NDP
Liberal
Green
Average Transfer to EDAs with Party
Candidate
6,257
5,203
2,889
2,554
431
Table Seven
Extra-Campaign EDA Activities, 2004
(Mean $ Expenditures)
Conservative
Won
Seat
2004
41
295
5,927
Lost
Seat
2004
190
58
2,377
Liberal
Won
Seat
2004
337
90
4,826
NDP
Lost
Seat
2004
74
18
3,807
Won
Seat
2004
52
0
4,164
Lost
Seat
2004
7
3
639
BQ
Won
Seat
2004
0
0
535
Greens
Lost
Seat
2004
0
0
355
All
EDAs
1
Radio Ads
2
TV Ads
867
Other Ads
Fund
982
5,128
2,471
5,235
591
3,942
17
211
Raising 1,969
Activities
Office
332
Expenses 6,281 3,641 6,740 3,095 8,256 1,083 1,839 1,542
573
2,495
309
346
140
0
0
0
Polling 552
Professional
422
1,346
653
2,069
649
172
70
55
Services 883
290
100
131
0
1.61
25
0
0
Research 449
Salaries &
114
530
482
2,564
241
0
0
25
benefits 416
Travel &
461
3,117
654
710
218
653
1,339
98
Hospitality 805
Other (bad
730
8,097
2,590
534
340
3,999
499
104
debts, 3,704
conventions)
TOTAL* 49,517 23,127 75,514 35,081 60,963 19,591 44,088 25,454 4,083
* Total includes funds transferred from the EDA to other levels of the party organization.
25
Figure Two
Impact of EDA Financial Strength on Popular Vote Percentage
2006
Conservative EDA Balance by Conservative Vote Percentage
Liberal EDA Balance by Liberal Vote Percentage
__
26
NDP EDA Balance by NDP Vote Percentage
Bloc EDA Balance by Bloc Vote Percentage
27
Green EDA Balance by Green Vote Percentage
28